How this is worked out
Both schedules are walked month by month, since neither has a closed-form solution.
The minimum-repayment schedule recalculates the repayment each month as the greater of the issuer's dollar floor and a percentage of the current balance plus that month's interest. As the balance falls the repayment falls with it, and each smaller repayment clears less principal than the last.
Two conventions exist for the minimum and the difference is not cosmetic. A minimum of "a percentage of the balance plus that month's interest" always reduces the balance. A flat percentage of the balance may not: at a 20–25% APR, 2% of the balance is barely above the month's interest, so the balance decays so slowly that the payoff runs past this calculator's sixty-year horizon. The calculator says which of the two has happened rather than reporting both as failure.
The fixed-repayment schedule holds the amount constant. Interest for the month is balance × APR ÷ 12 and everything above it reduces the principal, so a steady repayment clears an accelerating share of the balance.
For several debts, avalanche and snowball are both simulated in full: each debt receives its minimum, the rest of the budget goes to one target, and the freed repayment rolls onto the next debt as each one clears.
A worked example
- Balance / APR
- $6,000 at 20.99%
- Minimum repayment rule
- 1% of balance plus interest, $20 floor
- First minimum repayment
- $164.95
- Minimum only — time to clear
- 22 years 5 months
- Minimum only — interest paid
- $9,661
- Fixed $300 a month — time
- 25 months
- Fixed $300 a month — interest
- $1,449
The minimum repayment shrinks as you pay it
Your minimum is a percentage of the balance. Pay it down and that percentage is taken of a smaller figure, so the repayment falls, and each smaller repayment covers the interest first and clears a little less principal than the one before.
On $6,000 at 20.99% with a minimum of 1% of the balance plus interest, the first repayment is $164.95 — of which $104.95 is interest and $60 reaches the balance. Twenty-two years and $9,661 in interest later the card is clear. The same balance at a fixed $300 a month is gone in twenty-five months for $1,449.
The first repayment differs by $135. The outcomes differ by $8,212 and twenty years, because one number stays put and the other retreats.
The 2019 reforms, and what your issuer must now do
ASIC’s credit card reforms changed several things that made the trap worse. Credit limit assessments must be based on your ability to repay the full limit within a reasonable period — three years, in ASIC’s guidance — rather than on your ability to make minimum repayments.
Unsolicited credit limit increase offers are prohibited. You can request a limit reduction or close the card online, and the issuer must action it rather than routing you to a retention conversation. Interest can no longer be charged retrospectively on balances that had the benefit of an interest-free period.
Your statement must also show how long the balance would take on minimum repayments, and what repayment would clear it in two years. That box is the same calculation as this page, and it is worth comparing against your own figures above.
Avalanche costs less; snowball gets finished
With more than one debt, avalanche targets the highest rate and always costs less in interest. Snowball targets the smallest balance and clears one debt sooner, which is the reason more people complete it.
The calculator runs both and reports the actual gap for your numbers. Across a typical mix — a bank card at 20.99%, a store card near 25% and a car loan at 8% — avalanche usually saves a few hundred dollars while snowball clears its first debt within a few months.
Buy now pay later balances complicate the picture. They carry no interest but do carry late fees, and they have hard payment dates. Treat them as fixed commitments in your budget rather than as debts to be ordered, and make sure the amount you commit to your target debt still leaves them covered.
Balance transfers, hardship, and free financial counselling
A 0% balance transfer works, with the same two failure modes as everywhere: not clearing the balance within the promotional period, and using the emptied card. Check what rate the balance reverts to at the end — Australian revert rates are often the cash advance rate rather than the purchase rate, which is higher.
If you cannot meet repayments, you have a legal right to apply for hardship assistance. Under the National Credit Code the lender must consider a hardship notice and respond within set timeframes, and arrangements can include reduced repayments, a payment pause or frozen interest. Applying early, before arrears build, gives you far more room.
The National Debt Helpline provides free, independent financial counselling. The Australian Financial Complaints Authority handles disputes with lenders at no cost and its determinations bind the lender. Neither charges you anything, which is the clearest distinction between them and a commercial debt agreement company.
Assumptions and sources
- Payoff schedules
- Both schedules walked month by month. Verified in tools/test/finance.mjs against independently calculated payoff tables.
- Credit card reforms
- ASIC credit card responsible lending obligations and related reforms — three-year affordability assessment, ban on unsolicited limit increases, online limit reduction and closure. checked 2026-08
- Statement disclosure
- National Credit Code requires statements to show the time to repay on minimum repayments. checked 2026-08
- Hardship
- National Credit Code hardship notice provisions; the National Debt Helpline and AFCA both provide free assistance. checked 2026-08